General Papers Limited vs A.P.A. Pakkir Mohideen and Brothers

Panchapakesa Iyer, J.—This is an appeal by the General Papers Limited, Madras, defendants in O.S. No. 43 of 1951 on the file of the

Principal Subordinate Judge of Tirunelveli, against the judgment and decree therein.

That was a suit filed against them by one Pakir Mohideen and others of Kadianallur for recovering from them Rs. 6,781-12-0 with subsequent

interests and costs. The story of the plaintiffs was briefly this.

On 1st March, 1950, the plaintiffs'' agent, Annamalai Nadar, placed an order Exhibit B-1 with the defendants for 7 bales 308 reams of imitation

glassine paper worth Rs. 4,499-11-o. On 6th March, 1950, he placed an order for 3 bales of coloured transparent paper worth Rs. 1,454-11-0,

under Exhibit B-2. Both these orders were placed by him after inspecting the stock of such paper with defendants, and approving of their quality

but without separating the bales covered by the two contracts from the general stock with the defendants. The prices were ex-godown Madras,

and the goods were to be despatched by railway to Sattur Railway Station. The packing and forwarding charges and sales tax were to be paid

extra by the buyers. The entire price and charges were to be paid by the plaintiffs at Tenkasi within the jurisdiction of the lower Court, through the

South India Bank, Ltd., The appellants sent both the consignments together by railway to Sattur consigned to self, and not to the plaintiffs, on 7th

March, 1950, as per Exhibit A-2. The invoice for the goods came to Rs. 6,058 including the sales tax, forwarding charges and registration

charges. The appellants drew a bank draft, Exhibit A-5, in favour of the South India Bank Ltd., Tenkasi, and sent it on 9th March, 1950, along

with the railway receipt to the South India Bank with a covering letter Exhibit B-3, requesting the Bank to collect the amount as per the draft from

the plaintiffs and deliver the railway receipt to them, duly endorsed in their favour, if they paid the draft amount and the clearing charges and over-

due interest, if any, and requesting the bank to remit the proceeds to them, the over-due interest being directed to be charged at 6 per cent per

annum. The plaintiffs paid the South India Bank, Tenkasi, Rs. 6,058, as per Exhibit A-2, and another sum of Rs. 6-6-0 towards the bank''s

commission on 16th March, 1950 and got the railway receipt duly endorsed in their favour by the bank. But when they proceeded to Sattur

Railway Station to take delivery of the goods they found that the goods had not arrived there. Ultimately they learned from the appellants that the

goods were the subject of a fire accident on 14th March, 1950, in the course of transit, and that the salvaged wreck of the articles was in

Tiruchirapalli Goods Station. The appellants learnt this by a letter, Exhibit B-5 dated nth April, 1950, to them from the Chief Traffic Manager,

Tiruchirapalli, and they communicated it to the plaintiffs. They tried to recover the loss from the railway, which however denied its responsibility

relying on various things, like inevitable accident, the terms of the risk note signed by the appellants, etc. They then tried to make the plaintiffs

approach the railway authorities and claim the damage, and returned the railway receipt to them through the brother of Pakir Mohideen for that

purpose. The plaintiffs succeeded no better than the appellants in recovering anything from the railway. So, they filed the suit claiming the amount

from the appellants on the ground that the property in the goods consigned had not passed to them but had remained with the appellants at the time

the goods were destroyed by fire.

The appellants strenuously contested the suit, mainly on four grounds : (i) that the lower Court had no jurisdiction to try the suit as the contracts

were made at Madras and as the appellants were residing outside its jurisdiction, and the goods were to be delivered at Sattur outside the

jurisdiction of the lower Court; (ii) that the property in the goods had passed to the plaintiffs even at Madras itself, the moment the contracts under

Exhibits B-1 and B-2 were concluded, as the goods were in a del iverable state and had been inspected and approved by the plaintiff''s agent,

Annamalai ; (iii) that in any event, the property in the goods had passed to the plaintiffs as soon as the goods were taken out from the stock in the

godown and put on the railway for transmission to them ; and (iv) that the plaintiffs had elected to work out their remedies against the railway and

for that purpose had taken back the railway receipt from the appellants, to whom they had given it for recovering the amount from the railway, and

so it was not open to the plaintiffs to file this suit thereafter and seek to make the appellants liable therefor. The plaintiffs, of course, strongly

opposed all these four grounds urged by the appellants.

The learned Subordinate Judge held on the ground of jurisdiction against the appellants, on the ground that though the contract was entered into

at Madras, and the goods had to be delivered at Sattur, and the lower Court had no jurisdiction over Madras or Sattur, the plaintiffs, who were

living at Kadianallur within the lower Court''s jurisdiction, had chosen to file the suit there and the appellants had acquiesced in that jurisdiction after

an initial formal objection to it, and so were estopped from questioning such jurisdiction. He added that though consent could not confer

jurisdiction on a Court, still estoppel would operate where the Court had inherent jurisdiction, and when it was only a question of irregular

jurisdiction. He found on points 2 and 3 that the goods had to be delivered at Sattur, under the contracts though the word ''despatched'' had been

used in the place of the word ''delivered'', and that the property in the goods had not passed to the plaintiffs on the goods being entrusted to the

railway, a common carrier, since they were consigned to self, and the railway receipt was sent to the South Indian Bank, which was instructed to

endorse it and hand it over to the plaintiffs, only after they had paid the draft amount as well as the bank''s charges and over due interest if any. As

this payment to the bank was made, and the railway receipt endorsed to the plaintiffs only on 16th March, 1950, that is two days after the

destruction of the goods by fire in transit, he held that the goods at the time of the destruction by the fire accident remained the property of the

appellants who had retained control over them despite their entrustment to the carrier and so the loss must fall on the appellants. On the fourth

point he held that the appellants had entered into a prolonged correspondence with the railway authorities trying to fix the responsibility for the loss

on them, and, while the matter was still undecided, had made the plaintiffs take interest in it, and correspond with the railway administration for the

recovery of the loss, and that this would not preclude the plaintiffs from proceeding against the appellants for the loss when they did not recover

anything from the railway and it was not alleged that the railway had paid them for the loss. So he decreed the suit with costs. Hence this appeal.

We have perused the entire records and heard Mr. R. Gopalaswami Iyengar, the learned Counsel for the appellants, and Mr. K. Bashyarn, the

learned Counsel for the plaintiffs. Mr. Gopalaswami Iyengar urged before us also the same four contentions that were urged by the appellants in

the lower Court, and contended that the lower Court had gone wrong in its findings on every one of them. He urged first that the lower Court was

wrong in holding that mere acquiescence in its jurisdiction, after vigorously contesting it, would give the lower Court jurisdiction to try the suit when

even consent would not give jurisdiction, as stated by the lower Court itself. That is so. But the lower Court had undoubted inherent jurisdiction to.

try the suit, in the circumstances, as pointed out by Mr. Bashyam, since a part of the cause of action, namely, the fact of the money due under the

contracts, having to be paid at Tenkasi, within the jurisdiction of the lower Court, and Section 20(c), Civil Procedure Code, conferred jurisdiction

on the lower Court. So, though the contract was made at Madras, and the defendants were not living within the jurisdiction of the lower Court, and

the goods were to be delivered at Sattur outside the jurisdiction of the lower Court, the lower Court had still jurisdiction to try the suit as part of

the cause of action namely, the place where the money under the contract, was payable, was within its jurisdiction. It was not disputed that the

money was actually paid by the plaintiffs to the South India Bank, Tenkasi, on 16th March, 1950, and that the railway receipt in respect of these

goods was thereafter endorsed by the bank''s agent and handed over to the plaintiffs at Tenkasi. The plaintiff''s grievance is that the railway receipt

at the time of its being endorsed and handed over to them, was not backed by goods, the goods having been destroyed two days earlier by fire.

That is why they filed the suit to recover the money from the appellants. So there is no doubt whatever that part of the cause of action ; for the suit

arose in Tenkasi, within the jurisdiction of the lower Court, as urged by Mr. Bashyam. So we over-rule this contention.

The next was that as the goods covered by the contracts, Exhibits B-1 and B-2, were in a deliverable state, and as the plaintiff''s agent

Annamalai had inspected and approved of them, they must be deemed to have been unconditionally appropriated to the plaintiffs and to have

become their property the moment the contracts were entered into at Madras, or at least when they were separated from the general stock and put

in the cart to be taken to the Beach Station at Madras for consignment, and so the plaintiffs ought to have been directed by the lower Court to

bear the loss by the fine later on. Mr. Gopalaswami Iyengar relied on the ruling in Langton v. Higgins 4 H. & 391 (118 Rev. Rep. 519) , and on

the ruling in Aldridge v. Johnson 110 Rev. Rep. 875 , referred to therein, in support of the above contention. We agree with Mr. Bashyam that

those rulings will have no application to the facts of this case. In Aldridge v. Johnson 110 Revised Reports 875, it was held that the property

passed to the buyer when the barley was put into the sacks supplied by the buyer. In Langton v. Higgins 4 H. & 391 (118 Rev. Rep. 519), the

property was held to have passed to the buyer by the sellers putting the peppermint oil into the bottles supplied by the buyer. With great respect

we agree that in those cases the property passed to the buyer by such act. But the sellers in this case did not take out the bales contracted for from

the general stock with them, and put them into any cart or box sent by the buyers, when alone the appropriation with the implied assent of the

buyer would be made out and property pass. Indeed even in Firm Paharia Mal Ram Sahai Vs. Birdhi Chand Jain and Sons, , a ruling of the East

Punjab High Court relied on by Mr. Gopalaswami Iyengar, it was remarked that where there is a contract for sale of unascertained goods, it is

necessary that they should be identified and ascertained before the contract can be performed, and that if the parties agree that the contract goods

shall be taken from some specified larger stock, then there is no identification of the goods as contract goods till they are ascertained on severance,

and that in this connection a mere notional severance is not sufficient, and that it is well-settled that before property in the goods passes to the

buyer, the individuality and identity of the goods to be delivered under the contract should be established. So the mere fact that Annamalai had

inspected the general stock and approved of the quality of the paper, and that the price was fixed ex-godown at Madras, and the buyer had to pay

the freight, sales tax, packing charges, etc., will not do to pass the property to the buyers, as the contracted bales were not separated from the

general stock and given to Annamalai, and therefore the property in the suit bales had not passed at Madras itself to the plaintiffs, the buyers here.

Mr. Gopalaswami Iyengar then relied on the following passage in the judgment of Bishan Narain, J., in the Punjab ruling quoted above:

At the time when the goods were removed from the godown there was irrevocable and unconditional appropriation of the goods to the contract

and it appears to me that if later on the seller had changed the bales then it would have been in breach of the contract, and if the goods bad been

destroyed after they had left the godown then the buyers'' goods would have been destroyed, and not the sellers'' goods.

This too will not help Mr. Gopalaswami Iyengar. It is no doubt true that the payment of the price is not a condition precedent to the passing of the

property in the goods. Thus, if a man selects a particular fountain pen and buys it, and leaves it in the shop to go and fetch the price, and the pen is

destroyed by fire before he returns, he will have to bear the loss as the pen was appropriated to him irrevocably and had become his property

before it was destroyed by fire. But, in the present case, there was no express or implied assent of the buyer when the appropriation was made by

the seller, at his godown, of the particular bales towards the contract, and the appellants-sellers cannot rely on Section 23(1) of the Sale of Goods

Act but only on Section 23(2).

The observations of Wadsworth, Offg. C.J., in a Bench decision, M. Siddique and Company Vs. Mysore Textiles Agencies, , to which one of

us was a party, at page 251, will apply to all cases like these. Those observations are to the following effect:

Having regard to the terms of Section 23(2) of the Act it must, we think, be held that the sale would be completed by the delivery of the goods to

the railway for the purpose of transmitting them to the buyer provided that the seller did not reserve the right of disposal. Translating this into the

terms of ordinary commerce, if the seller delivered the goods to the railway for conveyance to self at Calcutta there would not be such an

appropriation as would pass title to the purchaser. In order to complete the transaction it would be necessary to endorse the railway receipt and

deliver it to the buyer. If, on the other hand, when this consignment was booked at the railway station in Cochin State the railway receipt was made

out to the buyer, this would become a document of title vesting in the buyer alone the right of ownership in the goods while in transit. The mere fact

that the document of title was retained in the custody of the seller, though it might give him some equitable lien over the goods, would not prevent

the title from passing to the buyer.

With great respect we agree with the above observations in entirety, and to the extent the observations in Firm Paharia Mal Ram Sahai Vs. Birdhi

Chand Jain and Sons, differ from them, we differ from the Punjab decision and prefer to follow the decision of this Court.

So we come to the third point, namely, whether the property in the goods passed or did not pass to the plaintiffs, because the appellants

reserved the right of disposal over them by consigning the goods to self and sending the railway receipt to the bank which must in the

circumstances be held to be the appellants'' agent, directing the bank to deliver the railway receipt duly endorsed to the plaintiffs only after the

plaintiffs had paid the bank the money due as per the draft and the bank''s commission and the overdue interest if any. Mr. R. Gopalaswami

Iyengar urged that such action on the part of the appellants would only amount to securing the contract price before parting with the railway

receipt, and that the property in the goods would still pass to the buyers, the plaintiffs. He relied on an observation in paragraph 295, at page 223,

of Volume 29 of Halsbury''s Laws of England, II Edition. But, as Mr. Bashyam pointed out, that paragraph itself states in another place that if the

seller takes the bill of lading to his own order, and parts with it to a third person, not the buyer, (like the bank here) and that third person by virtue

of his possession of the bill of lading gets the goods, the buyer is held not to have the property so as to enable him to recover from the third party,

notwithstanding that the act of the seller was a clear breach of the contract. That would show the observations of Wadsworth, Offg. C.J., in M.

Siddique and Company Vs. Mysore Textiles Agencies, , to be correct and the observations of Bishan Narain, J., if taken to be to the contrary, in

Firm Paharia Mal Ram Sahai Vs. Birdhi Chand Jain and Sons, to be not correct.

Mr. Gopalaswami Iyengar then relied on a ruling of a Bench of the Allahabad High Court in Peare Lal-Kishan Prasad Vs. Diwan Singh-

Ganeshi Lal, , for both the second and the third points. That ruling will not also help him. In our opinion, it simply says that the intention of the

parties would be the governing factor. It says:

The real question in all such cases is whether the parties did intend that property should pas....The true, test, therefore, is what was the intention of

the parties.

In other words, each case has to be decided on its own facts, regard being had to the intention of the parties under the particular contract.

Here we have no doubt that the intention of the parties was that the goods had to be delivered at Sattur, despite the use of the word ''despatched''

and that the sellers should have control over the goods and the property in them till the buyers paid the price to the bank at Tenkasi and got the

railway receipt endorsed in their favour, after paying the price, the bank''s commission and overdue interest, if any and not a second before. In

circumstances, as are proved in this case, the property in the goods remained till then only in the sellers as is clear not only from the ruling in M.

Siddique and Company Vs. Mysore Textiles Agencies, , quoted above, but also from the rulings in The Ford Automobiles India Ltd. Vs. The

Delhi Motor and Engineering Co., . The Bank of Morvi, Ltd. v. Baerlein Bros. I.L.R.(1924) 48 Bom. 374, Sunder Singh v. Gulab Singh AIR

1927 Lah. 269 Jagadish Prosad v. Produce Exchange Corporation AIR 1946 Cal. 245. and Governor-General in Council Vs. Joynarain Ritolia, ,

relied on by Mr. Bashyam. Mr. Bashyam relied also on the observations of the Supreme Court in C.I.T., Madras v. Mysore Chromite, Limited

(1955) S.C.J. 185, to the following effect:

It must, therefore, follow that at the earliest the property in the goods passed in London where the bill of lading was handed over to the buyer''s

bank against the acceptance of the relative bill of exchange.

He also contended that the property in the goods, covered by the suit contracts, passed to the buyers only when the railway receipt was handed

over duly endorsed to the plaintiffs by the South India Bank, Tenkasi, on their paying the amount of the draft and the Bank''s commission, and the

overdue interest, if any, on 16th March, 1950, that is, two days after the goods were destroyed by fire in transit. We agree.

Mr. Gopalaswami Iyengar then relied on the ruling in The Parchim (1918) A.C. 157. where the Privy Council held that the presumption raised

by the provisions of the Sale of Goods Act regarding property covered by a bill of lading taken by the sellers in their own name, and not to be

handed over to the buyers till the price was paid, could be rebutted by proving circumstances to the contrary showing that the sellers took the bill

of lading in their name only to secure the contract price, and not with the intention of withdrawing the goods from the contract, in which case there

will be nothing inconsistent with an intention to pass the property, and, therefore, the property may pass either forthwith subject to the sellers'' lien,

or conditionally on performance by the buyer of his part of the contract. They added:

Prima facie the presumption in such a case appears to be that the property is to pass only on the performance by the buyer of his part of the

contract and not forthwith subject to the sellers'' lien-Inasmuch, however, as the object to be attained, namely, securing the contract price may be

attained by the seller merely reserving the lien, the inference that the property is to pass on the performance of a condition only is necessarily and

somewhat weak, and may be rebutted by the other circumstances of the case.

They then relied on two very strong circumstances showing that the property in that case had passed to the buyer, namely, (i) that the cargo in that

ship was at the buyer''s risk from the moment it was placed in it, evidenced by its insurance, by the buyer, showing that the property had been

intended to pass to the buyer, and secondly that the contract was for the sale of the whole cargo of a named ship and that that cargo was clearly at

the risk of the buyers from a time anterior to the capture. So that decision was based on those two exceptional circumstances. No such exceptional

circumstances exist here, neither insurance by buyer, nor intention to pass the property to the buyer despite the appellants taking the railway receipt

in their own name, and sending it to a third party, the Bank for being delivered to the buyers only after they paid the price and Bank commission,

and got the railway receipt endorsed in their favour. So that ruling has no application to this case.

Mr. Gopalaswami Iyengar lastly urged that it is to the advantage of the seller that the property in the goods sold should pass at the earliest

possible moment to the buyer, and that the appellants-sellers must have intended the property to pass to the buyers the moment the contracts

under Exhibits B-1 and B-2 were concluded. The argument is not convincing. As Pollock and Mulla state, at page 138 of their Sale of Goods Act,

1933 Edition:

It has been seen that, generally speaking, it is to the advantage of the seller that the property should pass, at the earliest possible moment, to the

buyer. Nonetheless, in any good case, he may well think that it serves his interest better to retain ownership of the goods until some later period,

until, for instance the price is paid or bill of exchange accepted. If he clearly manifests this intention the law will give effect to it; and the rules of law

laid down in the previous section (referring to Section 24) relating to the passing of the property will in consequence be excluded.

In the present case, the appellants, the sellers, by their act, clearly intended that the property should pass to the plaintiffs-buyers only after they

had paid the price, the Bank''s commission and the overdue interest, if any, at Tenkasi, and got the railway receipt taken in the appellants'' name,

endorsed by the Bank, as the appellants'' agent, in their favour. So, under the provisions of the Sale of Goods Act, as well as under the above

rulings, the property in the goods remained with the appellants, the sellers, on 14th March, 1950, the date when those goods were destroyed by

fire.

This appeal deserves to be and is hereby dismissed with costs.